Macroeconomics
Macroeconomics
21st Edition
ISBN: 9781259915673
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Chapter 20, Problem 11DQ
To determine

The significance of trade-related entities.

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American apparel makers complain to Congress about competition from China. Congress decides to impose either a tariff or a quota on apparel imports from China. Which policy would Chinese apparel manufacturers prefer? LO26.4   a. Tariff. b. Quota.
Assume that the comparative-cost ratios of two products—baby formula and tuna fish—are as follows in the nations of Canswicki and Tunata:        Canswicki: 1 can baby formula ≡ 5 cans tuna fish      Tunata: 1 can baby formula ≡ 7 cans tuna fish   a. In what product should each nation specialize?        Canswicki should produce  _____-  , and Tunata should produce _____          b. Would the following terms of trade be acceptable to both nations?        i. 1 can baby formula ≡ 4 cans tuna fish:         yes or no          ii. 1 can baby formula ≡ 8 cans tuna fish:          yes or no        iii. 1 can baby formula ≡ 5.5 cans tuna fish:         yes or no
Assume that the comparative-cost ratios of two products— baby formula and tuna fish—are as follows in the nations of Canswicki and Tunata: Canswicki: 1 can baby formula ≡ 2 cans tuna fish Tunata: 1 can baby formula  ≡  4 cans tuna fishIn what product should each nation specialize? Which of the following terms of trade would be acceptable to both nations: (a) 1 can baby formula ≡ 2 1 2 cans tuna fish; (b) 1 can baby formula ≡ 1 can tuna fish; (c) 1 can baby formula ≡ 5 cans tuna fish?
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